This document contains information about a group project on the Indian financial system. It includes the names of the group members, definitions and descriptions of key terms related to financial institutions, instruments, markets and services in India. It also contains lists of vocabulary words to be learned.

2. Group Members
 Monica Jain
 Vini Jain
 Kaajal Jain
 Hardik Malbari
 Tarun Lohar
 Nimanshi Jain

3. INDIAN FINANCIAL SYSTEM
FINANCIAL FINANCIAL FINANCIAL FINANCIAL
INSTITUTION INSTRUMENT MARKETS SERVICES
S
BONDS CAPITAL ATM
MARKET
DEBENTURES DEBIT CARD
COMMODITY MARKET
SHARES
CREDIT CARD
FOREX
VAULTS
LEASING

4. Capital
Market
Primary Secondary
Market Market
New Issue Initial Public
BSE NSE
Market Offering

5. BULLS AND BEARS
A bull market is a A bear market is a
description of the stock description of the stock
market when it is generally market when it is generally
charging ahead and going going down in value over a
up in value over a period of period of time. This is a
time. This is a good market bad market for investors.
for investors.
Remember, bears
Remember, bulls CHARGE HIBERNATE!
AHEAD!

6.  Venture capital
 Venture capitalist
 Treasury Bills
 Stock Certificates
 Commercial Papers

7.  Equity Shares
 Preference Shares
 Convertible Shares
 Primary Market
 Secondary Market

8.  Public Provident Funds
 Surplus Funds
 Mutual Funds
 Debt Capital
 Equity Capital

9.  IPO
 Preferential Issue
 Issue Price
 Market Capitalization
 Price Discvery

10.  Floor price
 Cut off price
 Price Band
 Right Issue
 Bonus Issue
 Book Building

11.  Script
 A group
B group
 S group
 T2T group
 Z group

12.  Stock  Interest
 Stock Market  Maturity Period
 Broker  Yield To Maturity
 Sub-broker  Bonus
 Brokerage  Bonus Share

13. Commission
○ In this continuation of the previous example, a
commission of $20 can take your returns from 18.7%
down to 18.6% (100 shares), 17.3% (10 shares), 16% (5
shares) or 7% (1 share)
Years # of Shares Purchase Price Current Price Commission Fee Gain/Loss Pre-Fee Return After Fee Return
3 1 55 92 20 17 18.7% 7.0%
3 5 55 92 20 165 18.7% 16.0%
3 10 55 92 20 350 18.7% 17.3%
3 100 55 92 20 3680 18.7% 18.6%

14. Dividend
Years # of Shares Purchase Price Current Price Dividends Gain/Loss Return
3 100 55 92 0.5 3750 18.9%
3 100 55 92 1 3800 19.1%
3 100 55 92 5 4200 20.8%

15. Intraday Trading v|s Delivery Trading
• Buying and Selling • Buying and Selling
are on different days
on the same day.
• Brokerage will be • Brokerage will be
higher than intra-day
different for intra-day
and delivery based
trading, intra-day
being lesser

16. Premium & Discount
Define
e.g.
Script Spot Future Pre/Disc
Name Price Price
Suzlon 95.25 95.15 0.10 Discount
Reliance 1980.85 1985.10 4.25 Premium
Hindalco 104.10 102.30 1.80 Discount
Nifty 4619 4621 2 Premium

17. Hedging
• Infosys bags a deal worth $ 100000 from US
Company
• Rate of $ is Rs 48/-
• Amount to be realised after 2 months
• But Infosys estimates Dollar will fall to Rs 44/-
• Hence to reduce the loss Infosys will Hedge its
position by selling $ 100000 in Future Markets

18. Contd…..
 After Two months Infosys gets the Payment
 Dollar price is Rs 44/-
 So Infosys will bear a loss of Rs 4 per $ in Cash
Markets
 and will gain a Profit of Rs 4 per $ in Future
Markets
 In this way Infosys have Reduced the Risk of $
Price Fluctuation

19. What is auction???
Buyer Auctioneer Seller

20.  DEPOSITORY  DEALINGS
 DEPOSITORY  PORTFOLIO
PARTICIPANT  PORTFOLIO
 JOBBER MANAGEMENT
 PHYSICAL  LISTED
SHARES SECURITIES

21. ARBITRAGE
Let me tell you a story about a “Chaalu
Chaiwala”!
He was truly chaalu or shall we
say, “Extra Smart”!!

22. He would provide tea at Rs 5 per cup
and his cost of preparing the same was
Rs 4.
Thus he made a profit of Rs 1.

23. But he was not happy with
making a profit of just Rs 1.

24. So he thought about he
could increase his profit.
It was then that he had a
brainwave out of the
blue!

25. He identified a Government
canteen which offered tea at Rs 2.
BIG IDEA! Wasn’t it?
He could now simply buy
tea for Rs 2 and sell it for
Rs 5 and make a much
better gain of Rs 3!

26. This buying of a thing in
one market and selling in
another market at a higher
price is known as
“Arbitrage”.
Similarly if arbitrage
opportunities exist, stocks
too can be purchased in one
market at a lower cost and
sold in another at a higher
cost.

27. This buying of a thing in
one market and selling in
another market at a higher
price is known as
“Arbitrage”.
Similarly if arbitrage
opportunities exist, stocks
too can be purchased in one
market at a lower cost and
sold in another at a higher
cost.

28. So for the next few days, our Chaalu
Chaiwala had a field day earning
happily as he served his daily chai.
But Alas! Such arbitrage
opportunities do not last long. As
information flow increases and the
arbitrage opportunity gets known, it
soon starts to disappear.

29.  Fair value  Premium
 Market value
 Discount
 Intrinsic value
 Buy Back Share
 Average cost
 Par  Pay Back Share
 Offer

30.  Offer Price  Put
 Ask  Put option
 Call  Pay In
 Call Option  Pay Out
 Marginal Call  Buy on Opening

31.  Buy on closing  Order
cancellation
 Opening Price
 Prospectus
 Closing Price
 Limit Order
 Stop Loss Order
 Day Order
 Open Order
 Under
Subscribed

32. •Security deposit
•Clearing house

33. Dalal Street Wall Street

34. New York Stock Exchange (NYSE)

35. National Association of Securities
Dealers Automated Quotations
(NASDAQ)

36. American Stock Exchange (AMEX)

37. •Seed capital
•Market crash
•Invest
•Disinvest
•Investment bank

38. •Franchise
•Investment bank

39. • Dead cat bounce
• Float
• Rally
• General obligation bond(GOI)
• Default

40. •Credit ratio
•Short selling

41. • Public companies
• Private companies
• Kerb trading
 Securities and exchange
commission(SEC)
 Rollover